Tuesday, October 26, 2010

A Government in a hurry

David Cameron banged on about fairness at the Conservative conference in Birmingham. But there’s precious little fairness in what he’s planning to do.

Work and Pensions Secretary Iain Duncan Smith was garlanded with praise for his overhaul of the benefits system but actually he’s proposing to make the existing unfairnesses worse.

Chancellor George Osborne unveiled his big idea, which is axing child benefit for top earners. Yet within minutes, his plans were unravelling because they were so unfair.

Justice Secretary Kenneth Clarke insisted it was right to make prisoners work and promised to pay them £12,000 a year. But how can it be fair to offer jobs to criminals when honest men and women are out of work?

The Prime Minister told us “fairness is giving people what they deserve”.

OK then, let’s look at who gets what in our Big Society.

Child benefit won’t go to anyone earning the top rate of tax. That means a married man with a non-working wife will lose child benefit when his earnings hit £44,000 a year. But if he and his wife each earn £43,900 – totalling £87,800 – they will get child benefit.

It took only moments for even Mr Cameron and Mr Osborne to realise that, as leaders of the self-proclaimed “party of the family”, gunning for middle-class mums is a monumental miscalculation.

So they cobbled together a promise to introduce a tax allowance for married men which will doubtless wipe out the £1 billion saved by the benefit cut.Fairness was not their guiding light. They just wanted to screw more money from the better-off.

Then Mr Duncan Smith announced that in future nobody would be entitled to State benefits of more than £500 a week.

Has he considered how that compares with the income of ordinary working people?He might be interested to know that half the workers in the West Midlands earn £456.40 a week or less – and they have to pay tax on it.

His benefit cap is £26,000 a year. To earn that much, somebody in work needs to have a salary before tax of £35,000 because tax and National Insurance will cut his take-home pay to £26,000.

You need to be in the top 15 per cent of all earners in the country to have a salary of £35,000.

Ironically, the average taxable income is £25,800, more or less equal to the maximum Mr Duncan Smith would give you for not working.

Out of that, someone in a job must pay tax and National Insurance so his real income falls to £19,725.65 – £6,000 less than you might get for sitting at home and doing nothing.

One reason for the cap is to stop the State paying massive rent bills for families on benefits living in Mayfair and Belgravia. They will have to move out of their London mansions into more modest accommodation.

This will lead to an exodus from the capital as people are forced to find cheaper places to rent. In other words, London will simply export its problem families and dump them on the rest of us. That’s not fair either.

Then Ken Clarke declares it’s time to put prisoners to work. It’s a nice idea, especially when he says a quarter of their earnings will go to their victims.

Out of the £232 a week he wants to pay them, prisoners will get £20, presumably to buy drugs. Some of the rest will pay for their bed and board and a little may even find its way to their families.